17 November 2006
Experts predicted another tough financial year for the NHS in England after the Department of Health published the payment by results tariff increases for 2007/08.
Details have been released early to allow the NHS to 'road test' next year's tariff before the final version is published next month. The aim is to avoid the embarrassment of earlier this year when the 2006/07 tariff was published and then withdrawn after errors were found.
The 2007/08 tariff will rise by 2.5% but NHS organisations will have to find another 2.5% through efficiency savings. In a letter to the service, NHS chief executive David Nicholson said the increase balanced financial risk between providers and commissioners.
Pay may continue to be one of the biggest pressures next year – the Department said the tariff increase allowed for a 2.5% rise in pay. But it admitted pay reforms such as Agenda for Change and the consultant contract would cost an additional £452m.
Health finance specialist Noel Plumridge said: 'While it is consistent with Gordon Brown's aim of holding down pay awards, 2.5% doesn't sound like very much. You have to ask, is it viable when general inflation is already running somewhere over 3%?'
However, he added that the employers' hand had been strengthened by recent NHS recruitment drives.
'Over the last five years the NHS has flooded the market with trainees – the labour market has turned. Allowing only 2.5% for pay rises could be seen as an attempt to reclaim some of the overpayment made in pay reforms such as Agenda for Change. It will not be popular. The government might be willing to tough it out but it may not be achievable.'
The Department is keen on 'unbundling' tariffs so some elements of patients' care, such as diagnosis or rehabilitation, can be provided outside hospitals. It has published some indicative unbundled tariffs and backed local agreements on unbundling. This was welcomed by Institute of Healthcare Management chief executive Sue Hodgetts.
'These tariffs will help NHS managers plan for the coming year as the national unbundling of a few tariffs clears up some uncertainties and sends a clear signal that the tariff should support clinical priorities,' she said.
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